If you are behind on your mortgage payments you may qualify for assistance through the Step Forward Michigan program. It provides an interest-free loan of up to $30,000.00 to pay what you are behind on your mortgage. The loan is forgivable at 20% per year. To qualify, the mortgage must be on your residence. If it stops being your residence within five years, you must repay the loan. If it is your residence for five years after you receive the loan, you are not required to repay the loan. You must have the ability to make the regular monthly payments on your mortgage on a going-forward basis.
To qualify for the Step Forward Michigan program, you must have had an “involuntary qualifying hardship.” Examples of an “involuntary qualifying hardship” include, but are not limited to, job loss, medical event, divorce, etc. Some mortgage companies participate in the Step Forward Michigan program, and some do not. The Step Forward Michigan program can be used in combination with Chapter 7 bankruptcies and Chapter 13 bankruptcies. For an explanation of Chapter 7 and Chapter 13, see my article entitled, “The Difference Between Chapter 7 and Chapter 13, and Which One Is Right For You.”
Example 1: Emma experienced a loss of job but is back to work. She now has enough money to make her ongoing monthly mortgage payments, but has an arrearage of several months in past-due mortgage payments. Emma qualifies for a Chapter 7 “debt liquidation” bankruptcy to eliminate her credit card debt, but Chapter 7 bankruptcies do not resolve past-due mortgage payments. Emma can use the Step Forward Michigan program to resolve the past-due mortgage payments, and she can use Chapter 7 to eliminate her credit card debt.
Example 2: Hunter survived a severe illness. This caused him to get nearly one year behind on his mortgage. Now that he is well Hunter is making money again, but he is struggling with medical bills as well as a foreclosure sale coming up on his home. Hunter qualifies for a Chapter 13 “debt repayment” bankruptcy to stop the foreclosure and has the ability to pay something on his medical bills. But he does not have enough money left over at the end of the month to resolve the mortgage arrears on his home within the time limits allowed under a Chapter 13 repayment plan. Hunter can use the Step Forward Michigan program to pay what he is behind on the mortgage and use the Chapter 13 bankruptcy to resolve his sizeable medical debts.
The above information is a general overview and is not intended to be used as legal advice. There are additional limitations and requirements beyond this overview, particularly when the Step Forward Michigan program is used in combination with bankruptcy. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.
By: Michael Benkstein, Esq.
Managing Attorney, Bankruptcy Department
The Law Offices of Joumana Kayrouz, PLLC